Banks seeks to gain foothold in Indian market

By Jhoo Dong-chan

Korea's commercial lenders are eyeing the Indian market as part of efforts to diversify their business portfolio abroad.

Highlighting the country's population of 1.3 billion with an economic growth rate of over 7 percent, conglomerates are strengthening their ties with India. Following their lead, banks are opening branches to attract new customers there.

Shinhan and Woori Bank have six and three branches in India, respectively; while KB Kookmin, KEB Hana and the Industrial Bank of Korea (IBK) each have one branch.

KEB Hana Bank said it will open another branch in Gurugram, a financial and technology cluster city southwest of New Delhi in northern India, by the end of the year.

KB Kookmin Bank, which opened its first branch in February, is also reviewing a plan to open its second and third branch by 2022.

NH NongHyup Bank, which has yet to open a branch there, has recently sent personnel to conduct market research.

“India has strong growth potential. Korean banks knew that even 10 years ago, but were reluctant to enter into the market because not many people had a bank account at that time,” said a KB Kookmin Bank worker.

“However, the situation is now changing rapidly. More people are opening bank accounts, and there are now a great deal of financial opportunities in India. Unlike China, the Indian government is more receptive to foreign businesses.”

Of the nation's lenders, Shinhan Bank was the first to open a first branch there in 1996. Following this first branch in Mumbai, the bank has since opened five more.

“There is remarkable growth in the retail loan sector in India,” a bank official said.

Shinhan had lent $880 million as of the end of last year, up 18 percent from the previous year, and reflecting the country's rapid growth rate.

The Indian government has actively attracted foreign capital to promote the country's manufacturing sector and create more jobs since incumbent Prime Minster Narendra Modi came into office in 2014.

Last year, legendary investor Warren Buffett-led Berkshire Hathaway invested $300 million in the country's payment platform provider Paytm, while emerging market expert and investor Mark Mobius claimed India will continue its growth regardless of global oil prices.